Proposition 79


My take on CA Proposition 79 - No

This is part of my ongoing series of posts on each of the Propositions we'll be voting on. Here is the original post, with my ground rules for evaluating propositions, my scorecard and links to each of my arguments.

Proposition 79 - No

Summary - One of the two competing prescription drug propositions (the other being Prop 78), this prop seeks to solve the issue of cheaper medicine by creating a drug discount card, linking it to Medi-Cal, setting up a panel for oversight of drug prices, and creating a new way to sue drugmakers for "profiteering". If both this and prop 78 pass, the one with the most votes wins.

Commentary - This is proposition gets a definite No vote. As I said in the analysis of Prop 78, I'm just not convinced that prescription drugs are broken and even if they were, I'm definitely not convinced that a proposition and governmental involvement is going to fix anything. This puts us in rule #1 territory - devoid of a convincing argument to support this prop, it gets a no.

But this prop is worse than that. There are a number of good reasons to be very against it. First off, it tries to solve what is a market condition with government. At best, this amounts to government "negotiating" lower prices with drug manufacturers. Remember, however, that the government bears the sword, and every action carries with it the threat of force. Thats analogous to two businessmen sitting down at the table for negotiations and one of them has a loaded .45 on his side of the desk - who do you think has the upper hand in the negotiations? At worst, it amounts to what price ceilings always amount to - shortages. Unless you can force the drug manufacturer to shift their supply curve (which would be tough to do, given the R&D expenditures for pharmaceuticals), requiring a certain arbitrary "fair" price means thumbing your nose at the market. The market has a response for this type of disrespect, it rewards you with a shortage of product.

In addition, this proposition creates a new bureaucracy - a panel given the task of deciding what the market should do in setting prices for drugs. It must be nice for the writers of propositions like these to know that the government can solve everything, but I'm convinced of almost the exact opposite. Furthermore, this proposition would have to receive federal approval before becoming law - presenting a bumpy road of legal challenges and uncertainty (thankfully so, in this commentator's mind). Similar laws have already been turned down in other states by the feds.

But the single, largest reason that you should absolutely vote against this proposition is that it opens a ridiculous, gaping hole for trial lawyers. It would make "profiteering" from drug sales a civil offense, and allow a lawyer to sue - even if the lawyer cannot find a single client who was damaged by the "profiteering". If you think drug companies are going to enjoy selling you their top of the line drugs, at bargain bin prices, while being sued left and right for "profiteering", you are obviously out of touch with reality and should seriously consider staying home this election.

Please vote no on this proposition. It's a poorly written, overly bureaucratic solution to a problem that doesn't exist, bound to give trial lawyers a big, fat paycheck. Need I say more?

Posted: Sun - November 6, 2005 at 03:04 PM | | | | | | |

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